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TIACA declares air cargo rates will remain high for three years

THE International Air Cargo Association's (TIACA) has declared that air cargo shippers should prepare for at least another three years of elevated freight rates, reports IHS Media

22 March 2021 - 19:00
THE International Air Cargo Association's (TIACA) has declared that air cargo shippers should prepare for at least another three years of elevated freight rates, reports IHS Media.

The report comes after airlines report struggling to match capacity with highly uncertain passenger demands, while lucrative business travel may be lost forever.



'The airlines have to resize their fleets based on expected passenger numbers, and you can't operate the 2020 fleet at 2015 passenger volumes. They have to keep their optimal level of load factors to make the operations economically viable,' said TAICA director-general Glyn Hughes.



Some airlines are especially hurting with Cathay Pacific carrying 99 per cent fewer passengers in January compared to the same month last year.



The space shortage and travel bans also saw air cargo rates on the transpacific and Asia-Europe routes spike to record levels in April and May as demand for medical supplies overwhelmed all available capacity out of China.



Although pricing has fallen off those extreme highs, rates remain more than double what they were at this time last year.



Meanwhile Hellmann Worldwide Logistics chief operating officer, Jan Kleine-Lasthues declared this was being factored into Hellmann's service offerings to shippers.



'What I am recommending to some of our customers is if you want to secure capacity at the moment, the best way is to sign some BSAs for 50 to 60 per cent of your needed capacity, never 100 per cent. If you don't do that, you are completely dependent on the spot market,' said Mr Kleine-Lasthues.



For example, spot air cargo rates from Shanghai to North America dropped three per cent sequentially to US$5.37 per kilogramme, up 33 per cent from the same week last year. Pricing from Shanghai to North Europe fell six per cent to US$4.24/kg, up 56.5 per cent year over year.



WebCargo CEO Manel Galindo said prices will be high for at least the next nine months.



'The prices will be high for at least the next nine months. We have seen many countries being locked down again, and that means fewer flights and a much more complicated 2021,' said Mr Galindo.



'I think rates will stabilise around the current high level, but if one or two airlines pull out of a particular lane, like they did on Europe to South Africa in January when the new Covid-19 variant was discovered, I think you will see rates going sky high on those routes. If everything goes smoothly, and the vaccinations are rolled out, rates will stabilise around the middle of the year,' said Mr Galindo.


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